3.      Investment Properties

Investment properties consist of the following:

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The Company’s depreciation expense on investment properties was $292,887 and $709,854, for the three and six months ended June 30, 2026, respectively and $807,158 and $1,635,354 for the three and six months ended June 30, 2025, respectively.

Capitalized Tenant Improvements

The Company carries two categories of capitalized tenant improvements on its condensed consolidated balance sheets, which are recorded under investment properties, net, on the Company’s condensed consolidated balance sheets. The first category is the allocation of acquisition costs to tenant improvements that is recorded on the Company’s condensed consolidated balance sheets as of the date of the Company’s acquisition of the investment property. The second category is tenant improvement costs incurred and paid by the Company subsequent to the acquisition of the investment property. Both categories are recorded as a component of investment properties on the Company’s condensed consolidated balance sheets.

Depreciation expense on the allocation of acquisition costs to tenant improvements and tenant improvement costs incurred and paid by the Company subsequent to the acquisition of the investment property are depreciated on a straight-line basis as a component of depreciation expense on the Company’s condensed consolidated statement of operations. Capitalized lease incentives are amortized as a reduction of rental income on a straight-line basis over the term of the respective lease.

Details of these deferred costs, net of depreciation are as follows:

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Depreciation of capitalized tenant improvements arising from the acquisition cost allocation was $17,348 and $46,271 for the three and six months ended June 30, 2026, respectively and $89,891 and $198,545 for the three and six months ended June 30, 2025, respectively. During the six months ended June 30, 2025, the Company recorded $340,062 in tenant improvements arising from the acquisitions of the Buffalo Wild Wings Property and the United Rentals Property.  No such amounts were recorded during the three months ended June 30, 2025, or during the three and six months ended June 30, 2026.  

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During the three months ended June 30, 2026, the Company transferred $432,391 in capitalized tenant improvements from the acquisition cost allocation, net of accumulated depreciation, to assets held for sale associated with the Ashley Plaza and Citibank Properties.  During the six months ended June 30, 2026, the Company transferred $436,357 in capitalized tenant improvements from the acquisition cost allocation, net of accumulated depreciation, to assets held for sale associated with the Franklin Square, Ashley Plaza and Citibank Properties.  During the three and six months ended June 30, 2025, the Company transferred $1,140,481 in capitalized tenant improvements from the acquisition cost allocation, net of accumulated depreciation, to assets held for sale associated with the Salisbury Marketplace Property.  

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During the three and six months ended June 30, 2026, the Company recorded $57,375 and $93,795, respectively, in capitalized tenant improvements and during the three and six months ended June 30, 2025, the Company recorded $287,940 and $332,940, respectively, in capitalized tenant improvements.  Depreciation of capitalized tenant improvements incurred subsequent to acquisition was $26,918 and $69,105 for the three and six months ended June 30, 2026, respectively and $80,465 and $155,498 for the three and six months ended June 30, 2025, respectively.

During the three months ended June 30, 2026, the Company transferred $299,428 in capitalized tenant improvements incurred subsequent to acquisition, net of accumulated depreciation, to assets held for sale associated with the Ashley Plaza Property.  During the six months ended June 30, 2026, the Company transferred $644,466 in capitalized tenant improvements incurred subsequent to acquisition, net of accumulated depreciation, to assets held for sale associated with the Franklin Square and Ashley Plaza  Properties.   During the three and six months ended June 30, 2025, the Company transferred $51,980 in capitalized tenant improvements incurred subsequent to acquisition, net of accumulated depreciation, to assets held for sale associated with the Salisbury Marketplace Property.  During the three and six months ended June 30, 2025, the Company wrote off capitalized tenant improvements incurred subsequent to acquisition of $25,223 associated with a tenant that terminated its lease.  No such amounts were written off during the three and six months ended June 30, 2026.

Capitalized Leasing Commissions

The Company carries two categories of capitalized leasing commissions on its condensed consolidated balance sheets. The first category is the allocation of acquisition costs to leasing commissions that is recorded as an intangible asset (see Note 2, above, for a discussion of the Company’s accounting treatment for intangible assets) on the Company’s condensed consolidated balance sheet as of the date of the Company’s acquisition of the investment property. The second category is leasing commissions incurred and paid by the Company subsequent to the acquisition of the investment property. These costs are carried on the Company’s condensed consolidated balance sheets under investment properties.

The Company generally records depreciation of capitalized leasing commissions incurred and paid by the Company subsequent to the acquisition of an investment property on a straight-line basis over the terms of the related leases. Details of these deferred costs, net of depreciation are as follows:

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During the three and six months ended June 30, 2026 the Company recorded $35,380 and $122,006, respectively, in capitalized leasing commissions and during the three and six months ended June 30, 2025, the Company recorded $83,874 and $147,228, respectively, in capitalized leasing commissions.  Depreciation on capitalized leasing commissions was $16,663 and $43,847 for the three and six months ended June 30, 2026, respectively, and $54,180 and $109,229 for the three and six months ended June 30, 2025, respectively. During the three months ended June 30, 2026, the Company transferred $78,886 in capitalized leasing commissions, net of accumulated amortization, to assets held for sale associated with the Ashley Plaza Property. During the six months ended June 30, 2026, the Company transferred $620,920 in capitalized leasing commissions, net of accumulated amortization, to assets held for sale associated with the Franklin Square and Ashley Plaza Properties. During the six months ended June 30, 2025, the Company transferred $72,995 in capitalized leasing commissions, net of accumulated amortization, to assets held for sale associated with the Salisbury Marketplace Property. During the three and six months ended June 30, 2025 the Company wrote off capitalized leasing commissions of $5,282 and $26,404, respectively associated with early terminated leases.  No such amounts were written off during the three and six months ended June 30, 2026.

2025 Property Acquisitions

Buffalo Wild Wings Property

On January 24, 2025, the Company completed its acquisition of the Buffalo Wild Wings Property, a 5,933 square foot single tenant building on 1.82 acres located in Bowling Green, Kentucky, through a wholly-owned subsidiary, from CWS BET Seattle, LP. The general partner of CWS BET Seattle, LP is Fort Ashford Funds, LLC, a California limited liability company controlled and owned by Frank Kavanaugh, the Company’s President and Chief Executive Officer and the Chairman of the Board. The Buffalo Wild Wings Property, built in 2018, was 100% leased to Buffalo Wild Wings as of March 31, 2026. The purchase price for the Buffalo Wild Wings Property was $2,620,000 paid through the issuance of 209,600 OP Units at a price of $12.50 per OP Unit. The purchase price was determined by an independent, third-party appraisal obtained by the Company.  Pursuant to the Related Person Transaction Policy, the Board’s Audit Committee determined that the terms of the transaction were those that would normally be agreed upon in an arms-length transaction and approved this transaction.  The Company’s total investment was $2,667,429. The Company incurred $47,429 of closing costs which were capitalized and added to the tangible assets acquired. On December 30, 2025, the Company sold the Buffalo Wild Wings Property (see Sale of Investment Properties, below.)

United Rentals Property

On February 21, 2025, the Company completed its acquisition of the United Rentals Property, a 7,529 square foot single tenant building on 3.01 acres located in Huntsville, Alabama, through a wholly-owned subsidiary, from Dionysus Investments, LLC. The manager of Dionysus Investments, LLC is Fort Ashford Funds, LLC, a California limited liability company controlled and owned by Frank Kavanaugh, the Company’s President and Chief Executive Officer and the Chairman of the Board. The United Rentals Property, built in 2008, was 100% leased to United Rentals as of March 31, 2026. The purchase price for the United Rentals Property was $3,145,000 paid through the issuance of 251,600 OP Units at a price of $12.50 per OP Unit. The purchase price was determined by an independent, third-party appraisal obtained by the Company.  Pursuant to the Related Person Transaction Policy, the Board’s Audit Committee determined that the terms of the transaction were those that would normally be agreed upon in an arms-length transaction and approved this transaction.  The Company’s total investment was $3,187,446. The Company incurred $42,446 of closing costs which were capitalized and added to the tangible assets acquired. On December 30, 2025, the Company sold the United Rentals Property (see Sale of Investment Properties, below.)

Tesla Pensacola Property

On July 18, 2025, the Company completed its acquisition of a Tesla sales, service and delivery facility consisting of a 45,461 square foot, single story building on 3.498 acres of land located at 312 E. 9 Mile Road, Pensacola, Florida (the “Tesla Pensacola Property”). The purchase price paid for the Tesla Pensacola Property was $14,544,504 and the Company’s total investment was $14,624,638. The Company incurred $71,134 of closing costs which were capitalized and added to the tangible assets acquired.  The acquisition was funded using proceeds from a line of credit in the amount of $14,700,000 (the “Farmers Line of Credit”) with Farmers and Merchants Bank of Long Beach (“Farmers”).  The Farmers Line of Credit is cross collateralized by the Tesla Pensacola Property, the Company’s Citibank Property, Buffalo Wild Wings Property, and United Rentals Property.

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Assets Held for Sale

The Company records properties, including the related intangible lease assets, as assets held for sale and any related intangible lease liabilities and any associated mortgages payable, net, as liabilities associated with assets held for sale, on the Company's condensed consolidated balance sheets, when management has committed to a plan to sell the assets, actively seeks a buyer for the assets, and the consummation of the sale is considered probable and is expected within one year.

During February 2025, the Company committed to a plan to sell the Hanover Square Outparcel and as a result, reclassified the assets associated with the Hanover Square Outparcel as assets held for sale. As of June 30, 2026, the Company believed that the Company’s carrying cost exceeded the fair value, less costs to sell, so the Company recorded impairment of assets held for sale of $247,367 for the three and six months ended June 30, 2026.  No such impairment of assets held for sale was recorded for the year ended December 31, 2025.

During June 2025, the Company committed to a plan to sell the Salisbury Marketplace Property and as a result, reclassified the assets associated with the Salisbury Marketplace Property as assets held for sale. The Company believed that the fair value, less estimated costs to sell, exceeded the Company’s carrying cost, so the Company did not record any impairment of assets held for sale related to the Salisbury Marketplace Property in the year ended December 31, 2025.  On October 23, 2025, the Company completed the sale of the Salisbury Marketplace Property.

As discussed above, on July 18, 2025, the Company acquired the Tesla Pensacola Property and immediately committed to a plan to contribute the Tesla Pensacola Property to the Company’s first DST and subsequently commence efforts to sell 100% of the class 1 beneficial ownership interests in the DST. As a result, upon the acquisition of the Tesla Pensacola Property, the Company immediately recorded the assets associated with the Tesla Pensacola Property as assets held for sale. The Company believed that the Company’s carrying cost exceeded the fair value, less estimated costs to sell, so the Company recorded $120,000 in impairment of assets held for sale related to the Tesla Pensacola Property during the year ended December 31, 2025. On November 7, 2025, the company completed the contribution of the Tesla Pensacola Property to XXV DST.   As of June 30, 2026, the Company had sold 84.7% of the class 1 beneficial interests in XXV DST and deconsolidated the entity.  

During August 2025, the Company committed to a plan to sell the Greenbrier Business Center Property and as a result, reclassified the assets associated with the Greenbrier Business Center Property as assets held for sale. The Company believes that the fair value, less estimated costs to sell, exceeded the Company’s carrying cost, so the Company did not record any impairment of assets held for sale related to the Greenbrier Business Center Property in the six months ended June 30, 2026, or the year ended December 31, 2025. On February 13, 2026, the Company completed the sale of the Greenbrier Center Business Center Property.

During October 2025, the Company committed to a plan to sell the Buffalo Wild Wings and United Rentals Properties and, as a result, reclassified the assets associated with the Buffalo Wild Wings and United Rentals Properties as assets held for sale. The Company believed that the Company’s carrying cost exceeded the fair value, less estimated costs to sell, so the Company recorded $160,789 and $381,605 in impairment of assets held for sale related to the Buffalo Wild Wings and United Rentals Properties, respectively, for the year ended December 31, 2025.  In December 2025, the Company completed the sale of the Buffalo Wild Wings and United Rentals Properties.  

During December 2025, the Company committed to a plan to sell the Parkway Property and as a result, reclassified these assets associated with the Parkway Property as assets held for sale and liabilities associated with assets held for sale, respectively.  The Company believed that the fair value, less estimated costs to sell, exceeded the Company’s carrying cost, so the Company did not record any impairment of assets held for sale related to the Parkway Property in the six months ended June 30, 2026, or the year ended December 31, 2025.  On February 27, 2026, the Company completed the sale of the Parkway Property.

During February 2026, the Company committed to a plan to sell the asset group associated with the Franklin Square Property and reclassified the assets and related mortgage payable, net as assets held for sale and liabilities associated with assets held for sale, respectively.  The Company believed that the fair value, less estimated costs to sell, exceeded the Company’s carrying cost, so the Company did not record any impairment of assets held for sale related to the Franklin Square Property during the six months ended June 30, 2026. The Company completed the sale of the Franklin Square Property on March 30, 2026.

During May 2026, the Company committed to a plan to sell the asset group associated with the Citibank Property and reclassified the assets and liabilities as assets held for sale and liabilities associated with assets held for sale, respectively. As of May 31, 2026, the Company determined that the carrying value of the Citibank Property exceeded its fair value, less estimated costs to sell, by $217,960, which is recorded as loss on impairment of assets held for sale on the Company’s condensed consolidated statements of operations. The Company based its estimate of the fair value of the Citibank Property on the purchase price included in the purchase and sale agreement, a level 2 input. The fair value measurement date was as of May 31, 2026.  On June 24, 2026 the Company completed the sale of the Citibank Property.  

During May 2026, the Company committed to a plan to sell the asset group associated with the Ashley Plaza Property and reclassified the assets, intangible liabilities and the related mortgage payable, net, as assets held for sale and liabilities associated with assets held for sale, respectively.

As of June 30, 2026 and December 31, 2025, assets held for sale and liabilities associated with assets held for sale consisted of the following:

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Sales of Investment Properties

On October 23, 2025, the Company sold the Salisbury Marketplace Property to an unrelated third party for a sale price of $9,930,000, resulting in a gain on disposal of investment properties of $841,278 reported on the Company’s condensed consolidated statement of operations for the year ended December 31, 2025.

On December 30, 2025, the Company sold the Buffalo Wild Wings and United Rentals Properties to an unrelated third party for a sale price of $2,507,500 and $2,792,000, respectively, resulting in a loss on disposal of investment properties of $52,760 and $57,079, respectively, reported on the Company’s condensed consolidated statement of operations for the year ended December 31, 2025.

On February 13, 2026, the Company sold the Greenbrier Business Center Property to an unrelated third party for a sale price of $11,000,000 and used $7,000,000 from the proceeds to repay a portion of the Wells Fargo Mortgage Facility.  The sale of the Greenbrier Business Center Property resulted in a gain on disposal of investment properties of $4,213,586 reported on the Company’s condensed consolidated statement of operations for the six months ended June 30, 2026.  During June 2026, the Company made a $15,026 payment to the buyer of the Greenbrier Business Center Property for a tenant improvement obligation that reduced the gain on sale recorded during the three months ended March 31, 2026.  

On February 27, 2026, the Company sold the Parkway Property to an unrelated third party for a sale price of $7,825,000 and used $4,735,614 from the proceeds to repay the Parkway Mortgage.  The sale of the Parkway Property resulted in a gain on disposal of investment properties of $1,040,870 reported on the Company’s condensed consolidated statement of operations for the six months ended June 30, 2026.

On March 30, 2026, the Company sold the Franklin Square Property to an unrelated third party for a sale price of $24,100,000 and used $12,954,175 from the proceeds to repay the Franklin Square Mortgage.  The sale of the Franklin Square Property resulted in a gain on disposal of investment properties of $7,580,745 reported on the Company’s condensed consolidated statement of operations for the six months ended June 30, 2026.

On June 24, 2026, the Company sold the Citibank Property to an unrelated third party for a sale price of $2,150,000.  The sale of the Citibank property resulted in a loss on disposal of investment properties of $50,181.

The Company reports properties that either were previously disposed of or are currently held for sale in continuing operations in the Company’s condensed consolidated statements of operations if the disposition, or anticipated disposition, of the assets does not represent a shift in the Company’s investment strategy. The Company’s sale of the investment properties discussed above does not constitute a change in the Company’s investment strategy, which continues to include all investment property segments, depending on current market conditions, but which has been expanded to include sales of some of the Company’s legacy portfolio to create capital for the Company’s DST sponsorship program and other investment and acquisition opportunities.

Operating results of the Citibank, Greenbrier Business Center, Parkway, Franklin Square, Buffalo Wild Wings, United Rentals, Tesla Pensacola, and Salisbury Marketplace Properties, which are included in continuing operations, are as follows:

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